Tech Nation Talks North East: coordination key to scaling digital tech in the region

Kane Fulton, May 15, 2020 6 min read

The setting could hardly have been more different for Tech Nation Talks: North East. In contrast to our panel session last year, which took place at a packed PROTO innovation hub in Gateshead, this one was a more virtual affair – though no less engaging.

The fourth in our series of online panel events designed to connect and inform the digital tech sector was hosted by Kate Patton, our new Entrepreneur Engagement Manager for the North East. Kate, who lived in Scotland for more than 10 years, hailed the “warmth and genuine support” that she has received from founders and stakeholders in her new home since taking on the role.

As revealed in Tech Nation Report 2020, the North East attracted £100m of VC investment in 2019. Between 2015 and 2019, £22m was invested in emerging tech, of which £869k went into AI – a flourishing sub-sector in the region. One ‘high-value’ tech scaleup in the form of Durham’s Atom Bank calls this part of the country home.

Before we proceed, we would like to thank our partners Openreach and Barclays for supporting our Tech Nation Talks events. Both are pivotal in supporting digital businesses through the provision of valuable infrastructure, and in championing the UK tech sector.

Crisis management

The current crisis is creating a tough environment for founders across the UK. Pete Daykin, cofounder and CEO at SaaS platform and Applied AI 1.0 company Wordnerds, said that there is a dearth of digital tech scaleups in the North East, which he believes restricts digital tech founders from acquiring best practice and learning from their peers.

“I’m keeping my eyes and ears open, but we suffer a little bit from not having that massive cohort of startup owners who have been through the process, scaled, exited multiple times and know what they’re doing to teach the next generation,” he said. “According to the LEP’s digital steering group, only 180 tech companies in the region employ more than 10 people.”

In addition to creating the conditions necessary for startups to grow into scaleups, Pete wants to see more coordination between various stakeholders in the North East ecosystem. He applauded recent efforts to bring attention to this by tech network Dynamo, tech support agency Generator, and Sunderland Software City, whose second edition of the ‘One Region, One Sector, One Statement‘ report was released this week. Tech Nation; JUMP, Invest North East England; Tech North East; and Middlesbrough Digital also contributed to the document.

“It’s fantastic to see converging efforts in objectives and collaboration – I know from speaking to eminent luminaries in the startup scene, such as Sunderland Software City, that there is a general appetite to bring all of this stuff together,” he said. “It’s really important for the future of the North East.”

A very different time: Our Tech Nation Talks 2019 event was held at PROTO

Feeling the pinch

As a VC-backed startup, Wordnerds isn’t eligible for many of the Government (and other) financial support packages offered in response to the crisis. As such, its co-founder has frozen hiring and paused investment plans.

The company saw the bottom half of its pipeline “dry up overnight” when COVID hit, only to rebound when it pivoted to offer coronavirus-specific services. “Gobbling up market share on our way to expansion is more challenging in the current climate, so we’re looking to pivot our sales strategy and keep an agile mindset,” he said. “It’s kind of settled down – but things are definitely harder.”

Wordnerds’ attitude toward the crisis changed early on when an investor dealt some hard-hitting advice at a board meeting. “He told us that the world was going to look completely different in a few months’ time and that all that mattered was having cash in the bank,” Pete said. “We were bounding along on a wave of optimism at the time as we were hitting our numbers, and he made us react in a completely different way.”

Gilbert Corrales, founder of social marketing platform Leaf Grow, was concerned that the pandemic would weaken demand for marketing services. However, his startup has attracted business from companies looking to sell directly to consumers, which has become a necessity since Amazon stopped taking fulfilment orders on products outside of essential goods.

“People are realising that to stay alive, you need to move online and invest in services in a smart way,” he said. “We’re educating people on the best way to make their marketing spend deliver results, which is where we excel.”

Gilbert believes that honesty is a valuable trait for business leaders at this time. Fortunately, Leaf Grow broke even mid-pandemic and has not had to furlough staff or reduce salaries. But any comfort is not guaranteed to last.

“We probably have in advance of one month’s runway, and we’re banking on revenue coming in from our customers,” Gilbert said. “Whatever your situation, founders need to be transparent to their teams, be agile and have a growth mindset in order to react to opportunities.”

Results of our poll conducted with event attendees

Embracing the ‘new normal’

Attitudes toward home working are continuing to change in a week where Twitter made headlines by announcing that it would allow its employees to work from home ‘forever’. Leaf Grow was ahead of the game in previously deploying working from home tools to allow remote teams to work more efficiently. Recently, it onboarded new hires remotely for the first time.

Wordnerds, meanwhile, is exploring the possibility of saving money by allowing staff to timeshare an office with another local company a few days a week, a suggestion that attracted a positive response from three-quarters of its workers. “It’s incumbent on us as leaders to explore these things in a way that’s not scary for people in the workplace,” Pete said. “Doing so introduces all kinds of opportunities.”

Pete is particularly intrigued by the prospect of doing business over Zoom with companies located across the UK. “Most of our customers are in London, so before COVID I was spending half of every month there seeing people face-to-face in hotels,” he said. “The opportunity to do that over Zoom, shortening pipelines and tightening sales cycles, is intoxicating.”

While conceding that it’s too early for Wordnerds to think about international expansion, Pete expects that the move will be “massively easier” post-crisis. He is also optimistic regarding hiring talent remotely – including from outside of the region. “I wonder if we can start employing people in Costa Rica?” he asked, with a grin. “How about if I park my tanks on Gilbert’s lawn? I’m only kidding!”

A meetup at the TusPark coworking space in Newcastle

While the ‘new normal’ of remote work offers clear and novel benefits, it can pose a serious mental health challenge for founders and their teams. For this reason, Wordnerds has given its employees two days’ extra holiday on top of their normal allocation to take once the pandemic settles down.

“For an extrovert who gets all their power from hanging around with people, sticking me in a room for seven weeks on Zoom calls is my idea of a nightmare,” said Pete. “The boot is on the other foot – I now understand introverts when they bang on about how stressful it is going into work every day.”

Gilbert made sure that his team members were fully-equipped at the start of the pandemic, sending taxis to transport 5G dongles and other essential IT equipment to their homes. He maintains his own mental health by booking a ‘CEO day’ once a week, which blocks out meetings and gives him a chance to go on his daily walk to the local park.

Finding tomorrow’s talent

Karen Elliott, Associate Professor at Newcastle University Business School, reminded delegates that an opportunity to bolster the region’s tech credentials lies in forging closer connections between industry and further education.

“Talent is a big problem – it’s a topic that comes up in every meeting in addition to funding,” she said. “The question is how do we keep talent and make people aware of what’s on their doorstep. We can’t stop computer scientists being drawn to London, but we could better advertise what we’re doing in the North East.”

Karen is hopeful that three planned initiatives will help achieve this while encouraging the industry to place a greater focus on upskilling older workers. One of them is the co-creation of a Master’s degree programme around finance and fintech. The second is a new expo designed to connect postgraduates with hiring tech companies in the region.

In addition, Karen is exploring the feasibility of an online hub hosted by the university that would connect students with key figures in the community – from TEDxNewcastle founder Herb Kim to Newcastle Startup Week founder Paul Lancaster. At the same time, it would show how to get into the region’s incubators and tech coworking spaces such as Newcastle’s TusPark.

As the session came to a close, it became clear that our panellists are both realistic regarding what is needed to get through the crisis and optimistic about how to make the most of a challenging situation. Through increased coordination, transparent leadership and the start of an improved relationship with further education, the North East can build on its community’s existing collaboration efforts to help tomorrow’s scaleups grow.

Community, North East